Tesla's Shanghai assembly plant to be completed in May: government official

BEIJING/SHANGHAI (Reuters) - Tesla’s upcoming vehicle assembly facility in Shanghai is expected to be completed in May this year, a Shanghai city government official said on Wednesday.

The land of Tesla Gigafactory at a groundbreaking ceremony of Tesla Shanghai Gigafactory in Shanghai, China January 7, 2019. REUTERS/Aly Song

Chen Mingbo made the comments on the sidelines of an annual parliamentary meeting in Beijing, adding that part of the facility’s production line would be put into operation by the end of the year.

Chen, who heads the city’s economic and information technology commission, did not provide any further details.

The U.S. electric carmaker broke ground on the Shanghai factory in January and its CEO Elon Musk has said the firm aims to finish initial construction this summer and start production of the Model 3 toward the end of the year.

A full-fledged auto assembly factory can take about two years to build but the Shanghai government has thrown its support behind the Tesla project, which would be China’s first wholly foreign-owned car plant and a reflection of the government’s broader shift to open up its car market.

Tesla has been pushing forward its plans for the 500,000-vehicle-capacity plant after it secured a site in October, hiring staff, starting procurement for building materials and setting up a local financial leasing company.

Producing cars locally is also likely to help Tesla minimize the impact of the Sino-U.S. trade war, which has forced the car maker to lower prices of its U.S.-made cars in China - which has becoming increasingly important as the company seeks to offset softening demand in the United States.

On Tuesday, Tesla’s shares fell more than 5 percent in early trade after Chinese media reported Shanghai customs had suspended clearance for a batch of Tesla’s cars.

The company said that authorities have accepted its plan to resolve the clearance problem.

Chinese customs confirmed in a statement on its official WeChat account on Wednesday that it had stopped the Tesla Model 3 imports and was now monitoring the firm’ rectifications.

It said the Model 3 cars were stopped because they did not have Chinese language-warning signs and had missing or incorrect nameplate labels. It added, however, that the nameplates could be replaced at the port.

Reporting by Stella Qiu in Beijing and Brenda Goh in Shanghai; Additional Reporting by Yilei Sun in BEIJING; Editing by Himani Sarkar